Developers highlight ‘defect’ in approval of Scarborough subway funding

After a powerful developer lobby challenged the city over the Scarborough subway, its main arguments mirror the growing political concern over the line at city hall

Thestar.com
Dec. 15, 2015
By Jennifer Pagliaro

What developers say is a “fundamental defect” in the necessary paperwork threatens to undo the city’s plans for the controversial Scarborough subway.

As the Building Industry and Land Development Association, or BILD, takes on the city with an appeal at the Ontario Municipal Board - the provincial body that deals with land and development disputes - that’s just one of many issues that effectively puts the subway, and the future of transit in Scarborough, on trial.

At a hearing last week, BILD’s lawyers argued that the city failed in a key document to spell out the operating costs for the subway as they are required to by provincial legislation. What’s more, BILD’s lawyers say planning justifications for the subway extension are flawed and ridership numbers exaggerated.

The fight centres on a new, citywide development charge - fees drawn from builders to pay for new infrastructure - that council imposed to collect $165 million of its $910 million share for the subway.

If BILD is successful in its appeal, the city could have to go back to the drawing board to raise some or all of the needed $165 million. Though that’s just a fraction of the total $3.56 billion cost being shared with the provincial and federal governments, council is already contending with tens of millions of dollars in budget gaps for aging housing and TTC services.

And regardless of the outcome, the appeal could land the subway file back on the desks of city councillors early next year amid growing criticism over whether it should be built at all.

Documents tabled last week that outline the outstanding issues in BILD’s appeal closely mirror the ongoing political turmoil at city hall after council voted in 2013 to cancel a seven-stop, grade-separated, $1.48-billion LRT that would have been fully funded by the province.

Underlying it all, this central question: Does the city need to build a significantly higher-capacity subway if there is another viable option?

At the hearing, BILD lawyer Robert Howe warned they might push for the development charge to be killed entirely on the basis that council did not follow the proper process.

According to the provincial Development Charges Act, a background study must be completed before a development charge is approved and a bylaw passed. That study must include an “examination” of long term capital and operating costs - in this case, what it will cost to keep a three-stop subway extension running for decades.

But in the background study, completed by firm Hemson Consulting Ltd., there are no operating expenses provided.

“In its initial review of the capital and operating impacts, the city has indicated that the costs incurred to operate the (Scarborough subway extension) will be funded through fair (sic) box revenues and property taxes,” the report reads. “The operating impacts will be determined as part of the TTC and city’s annual budgeting process once the (subway) is operational.”
Howe told the Star they’re still considering whether to move a motion at the OMB to have the bylaw repealed.

“It sort of pays lip service to the provision of the legislation without adhering to it,” he said of the report, adding that, to date, there has been “no detailed discussion” of those costs with the city.

City lawyer Rob Robinson said officials “disagree” with BILD, but that he could not elaborate with litigation ongoing.

A spokesperson for the Minister of Municipal Affairs and Housing, speaking generally, said any background study needs an examination of long-term costs “to ensure that the municipality is able to support and maintain such infrastructure for the life-cycle of the asset.”

At city hall, senior staff haven’t provided operating costs.

In January, Councillor Josh Matlow, who supported the original LRT plan, requested those figures. Then-city manager Joe Pennachetti responded in part to say that the long-term capital costs were estimated at $30 million to $40 million annually. But he said operating costs had yet to be determined.

Council, including Mayor John Tory, who continues to back the subway plan, voted to shelve that line of inquiry. Matlow said it’s not surprising others are now asking those questions.

“It was completely negligent and irresponsible for council to have supported the Scarborough subway extension, along with the development fees, without the answers to these questions,” he said.

An email from the Star on Monday to current city manager Peter Wallace, chief financial officer Rob Rossini and chief planner Jennifer Keesmaat about operating costs went unanswered.

If the city were to build the LRT as previously planned, operating and capital maintenance costs would be paid by the province.

However, “If the city is overbuilding services, then development should not be required to pay for that,” Howe said.

Timeline of a controversial subway extension:

May 2013: In a move said to break council procedure, Speaker Frances Nunziata allowed a motion from Scarborough Centre Councillor Glenn De Baeremaeker asking for support for a subway. The vote was 35-9.

July 2013: Council votes to confirm support of a subway 28-16.

October 2013: With the backdrop of the ongoing Mayor Rob Ford crack scandal and facing questions from the province’s transit arm, Metrolinx, council again confirms its support for the subway over an LRT in a close 24-20 vote.

May 2015: Council approves a development charge to help pay for the subway and passes a bylaw, despite opposition from BILD.

June 2015: BILD files an appeal to the OMB.